From the Front Lines of Impact Investing: Reflections on the SVX US Journey

It has been almost a year since SVX US launched with its first issuer, TechSoup, at the old Pacific Stock Exchange Building in late 2018. It has been quite a journey. We thought our first year anniversary was the perfect time to reflect on our experiences from the front line of impact investing, and to consider our future as we look to take the organization from pilot to scale.

What is SVX?

First founded in Canada in 2007, SVX is a financial services firm that designs strategies, manages products, and mobilizes capital for impact ventures, funds, organizations, and investors. We provide a platform for capital raising and making investments in cleantech, health, education, food, and people. SVX has been able to share and scale operations into a number of other countries including Mexico and the United States (US) and we’ve worked with Cutting Edge Capital since 2015 to design, develop and deploy an SVX model for the US. Together we have:

  • created greater connections and access for the investor and venture community across borders, particularly in North America;
  • enhanced our shared capacity, technology, and knowledge to better serve our respective investor and issuer communities; and
  • created a single access point for all impact investors and issuers in the US.

SVX and Cutting Edge Capital collaborated with Bequia Securities to help bring SVX US to the market. We brought our first issuer on board last fall: TechSoup Global. TechSoup designed a $11.5 million capital campaign, including its Regulation A+ direct public offering, and we’ve had the good fortune of working with their team to help launch and manage their campaign via the SVX US platform.

What have we accomplished over the past year?

We’ve been able to take a number of important first steps for the SVX US platform:

  • Piloted the SVX focusing on one issuer to learn and demonstrate the model in the United States.
  • Leveraged technology, regulatory knowledge, issuer experience, marketing, and issuer/partner networks, building a combined cross-border effort and operation.
  • Pursued the lean start-up approach by bootstrapping with revenues from the issuer and leveraging existing team resources from SVX Canada, Bequia and Cutting Edge Capital.
  • TechSoup has already successfully raised $8M+ in financing from foundations, high net worth individuals, family offices, and the general public — from investments in the millions down to individuals investing $50. Major investors included Microsoft Philanthropies and VMWare Foundation.
  • Built profile for the platform and offering with features in media including Forbes, Devex, Barron’s, The Nonprofit Times, and more.

What have we learned?

We know a lot of folks have sought to develop impact platforms and exchanges, and the experience has been mixed. We certainly haven’t figured everything out yet, but we worked with most of those previous platforms and we knew what we were getting into based on our experience. It hasn’t been a straight line or hockey stick,but we’ve learned a great deal, and we’ve made good progress, so we wanted to share a few lessons from our experience in the past year:

  • Capital to scale: With help from partners, it is possible to bootstrap to pilot and start an impact investing platform. However, sufficient capital is needed to scale a sophisticated financial services offering.
  • The 100 per cent: It is possible to launch and develop an offering that is available for all investors from Wall Street to Main Street, including qualified high net worth individuals to the general public. However, small and/or direct investments are not a fit for all investors. In particular, foundations and family offices are seeking to invest through funds and managed offerings.
  • Backend and Frontend: There is a need to have a strong complement of operational resources (compliance, technology and internal operations) alongside effective marketing and community building resources to identify, convert, and manage investors and issuers.
  • Issuer Quality and Readiness: We were very fortunate to work with TechSoup as they are an outstanding organization with a great team, track record and global impact. There is a significant supply of potential issuers seeking capital. We have identified 50+ high quality prospects for our next steps towards scale. But we must ensure we work with the right organizations and teams, and we may need to help them build their investment readiness, from insights on securities regulations to navigating investor relationships.
  • Investor Readiness: It is critical that issuers are investment ready. But it is just as important that investors are well-prepared for the process of making impact investments. Investors benefit from education, insights and community, alongside the right advice from advisors and managers.
  • Platforms are possible: It is possible to successfully launch and operate an impact investing platform in the US that can mobilize capital.

What’s next?

We are looking to take our operations from pilot to scale over the next year, and we are connecting with potential partners that would like to join us on that journey including issuers, investors, like-minded ecosystem partners, and funders.

Over the next year and beyond:

  • We are looking to bring on up to five (5) new issuers in 2020 to 15 by 2022 to grow from $25 million to $75 million in capital mobilized per year.
  • We are looking to bring on new resources to support the organization, including technology improvements, operations and compliance, and community building. We may also look to build out more program supports including investor and investee readiness programs, modelled on the Canadian experience.
  • We are seeking to facilitate cross-border activity, particularly between Canada and the United States.
  • We are seeking greater alignment and focus of issuers and issuer categories with SDGs (eg.SDG 6: Water and Sanitation). This may include green bonds, water bonds, place-based funds, and more.
  • We want to build a self-sufficient and sustainable model that can continue to be shared in other jurisdictions.

We look forward to sharing more about the next steps on our journey in the months and year ahead.

Co-Authors: John Katovich, Adam Spence, and Kevin Taylor

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of SVX. This post is for informational purposes only. It is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. SVX US is operated by Social Venture ConneXion LLC (“SVX US”), which is not a registered broker-dealer. SVX US does not give investment advice, endorsement, analysis or recommendations with respect to any securities. All securities listed on the platform are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. Investing can have significant risks. You should be aware of these risks, and as appropriate, consult with appropriate financial professionals to support your decision-making processes.

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SVX is financial services firm & impact investing platform connecting ventures, funds, and investors to catalyze investment capital for impact. #ImpInv #SocEnt